08/12/2010

News / Union County Mortgage Broker Charged in Multi-Million Dollar Scheme to Obtain Loans Using Fake Identities & Documents

TRENTON – Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor today announced that a Union County mortgage loan solicitor has been charged with conspiring with others – including a Kearny woman who was charged previously – in a scheme to steal millions of dollars by obtaining mortgage loans using false identities and counterfeit documents.

According to Director Taylor, Nuno J. Sousa, 34, of Elizabeth, was arrested yesterday (Aug. 11) by detectives of the Division of Criminal Justice Major Crimes Bureau as a result of an ongoing investigation into the conspiracy. The Elizabeth Police assisted in the arrest. He was charged by complaint with first-degree conspiracy, first-degree money laundering, second-degree securities fraud and second-degree theft by deception. He is being held in jail with bail set at $200,000.

Sousa is charged in connection with an alleged conspiracy that also included Genilza R. Nunes, 36, of Kearny, who was arrested by the Division of Criminal Justice on March 9. She was charged by complaint with the same offenses. Those charges are pending, and she is being held in jail with bail set at $2 million.

The state investigation determined that Nunes, Sousa and a number of co-conspirators allegedly were involved in a sophisticated, multi-million dollar mortgage loan fraud scheme operating in northern New Jersey, including Morris, Somerset, Hudson, Union, Passaic and Essex Counties. The state has specifically alleged that Nunes and Sousa – with Sousa acting as the mortgage loan solicitor – engaged in fraudulent transactions involving five properties, with a total fraud of $2,152,800. However, it is believed that the scheme is much larger.

The investigation is being conducted and coordinated by Detective Sgt. Louis A. Matirko and Deputy Attorney General Marysol Rosero of the Division of Criminal Justice Major Crimes Bureau. The investigation is continuing and additional charges are anticipated.

Sousa, a mortgage loan solicitor who was associated with Castle Home Mortgage Corporation of Union, allegedly helped obtain, prepare, authenticate, and submit false mortgage loan application forms and false supporting financial documents to lenders on behalf of straw buyers between Nov. 1, 2008 and June 4, 2009. In his capacity as a mortgage loan representative, Sousa allegedly was also able to obtain and submit inflated and inaccurate appraisal reports to the victim lenders, who relied on the accuracy of the appraisals in approving the loans.

The state alleges Nunes was responsible for cultivating and creating straw buyers, including real and fake persons, for the purpose of engaging in the scheme. Nunes allegedly was one of the people responsible for creating phony documents in support of mortgage applications, including false identification cards, fraudulent financial documents, inflated real estate appraisals, altered real estate transfer documents, and fraudulent government documents, including U.S. passports and numerous state motor vehicle licenses. Nunes and others involved in the scheme used false names and the fraudulent documents to disguise their true identities.

Nunes, Sousa and their co-conspirators allegedly defrauded numerous lending institutions of millions of dollars through what is known as a “short sale mortgage loan property flip scheme.” A “short sale” is a type of pre-foreclosure sale of real estate where the lender holding the mortgage agrees to permit the property to be sold for a price less then the amount due on the mortgage loan. Short sales have become more prevalent due to the recent economic downturn.

In this case, individuals involved in the scheme were purchasing the properties as straw buyers, using false identities supported by counterfeit driver’s licenses, false financial records, and fictitious credit histories. Through a series of fraudulent transactions, the short sale properties were then sold or “flipped” at inflated values derived from fraudulent appraiser reports. A second straw buyer applied for a mortgage loan on the inflated property and obtained the loan under a false identity. The short sale property was then purchased with the loan proceeds, and, by design, the straw buyer made no payments on the loan, causing a loan default.

Because the straw buyer used a false identity, the lending institution was unable to locate the borrower. The difference between the sales price for the short sale transaction and the inflated loan obtained represented the net proceeds of the fraudulent scheme. Typically Nunes, Sousa and their co-conspirators obtained $100,000 to $300,000 per transaction.

The fraudulent enterprise allegedly included other licensed and unlicensed professionals, including real estate agents, mortgage loan brokers, real estate appraisers, notaries, lawyers, straw buyers and counterfeit document makers.

First-degree crimes carry a maximum sentence of 20 years in state prison and a $200,000 fine, while second-degree crimes carry a maximum sentence of 10 years in state prison and a $150,000 fine. The first-degree money laundering charges carry a period of parole ineligibility equal to one-third to one-half of the prison sentence imposed and a fine of up to $500,000.

The complaints are merely accusations and the defendants are presumed innocent until proven guilty. Because Sousa and Nunes are charged with indictable offenses, the charges will be presented to a grand jury for potential indictment.

http://www.nj.gov/oag/newsreleases10/pr20100812b.html

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